Legal Commentary

Michigan District Court Upholds Individual Mandate Against Challenge by the Thomas More Law Center

By Ilya Somin

Michigan federal district Judge George Caram Steeh just issued an opinion upholding the Obama health care plan?s individual mandate against a challenge by the conservative Thomas More Law Center and several individual plaintiffs who refuse to purchase health insurance by 2014 as the mandate requires. 

This is the first opinion issued on the merits in any of the health care lawsuits, though the court hearing the case brought by the state of Virginia earlier issued a decision denying the government?s motion to dismiss.

I don?t have time to comment in detail right now. But I will note a few key points. 

First, the decision upholds the mandate under the Commerce Clause alone. It does not address the government?s arguments claiming that the mandate is authorized by the Tax Clause and the Necessary and Proper Clause, except to say that Congress may use a monetary penalty to enforce a legitimate Commerce Clause regulation (which I think is correct). 

Second, the main point of the court?s Commerce Clause argument is that not having health insurance counts as an ?activity? rather than inactivity:

Far from ?inactivity,? by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants

Because not being insured therefore turns out to be an activity rather than inactivity, it is covered by Supreme Court Commerce Clause cases such as Gonzales v. Raich, whose implications for the mandate case I discussed at length in this post.

The problem with this reasoning is that those who choose not to buy health insurance aren?t necessarily therefore going to buy the same services in other ways later. Some will, but some won?t. It depends on whether or not they get sick, how severe (and how treatable their illnesses are), whether if they do get sick, they can get assistance from charity, and many other factors. In addition, some people might be able to maintain their health simply by buying services that aren?t usually covered by insurance anyway, such as numerous low-cost medicines available in drug stores and the like. In such cases, they aren?t really participating in the same market as insurance purchasers.

Of course, many people will buy the same service later, and for some the probability of doing so is quite high. But the individual mandate makes no distinctions on any such basis. It sweeps in nearly everyone. If the mere possibility that you might purchase a similar service somewhere else is enough to count as ?activity? and therefore regulable under the Commerce Clause, then almost any regulatory mandate would be permissible. For example, a requirement that each citizen purchase a gym club membership and exercise for one hour per day could be defended on the basis that, otherwise, people will be less healthy, which will make it more likely they will spend more money on medical care, health insurance, and perhaps other forms of exercise.

The opinion also claims that the Commerce Clause covers ?economic decisions? as well as ?economic activity.? ?Economic decisions,? by this reasoning include decisions not to engage in economic activity. That, however, would allow the Commerce Clause to cover virtually any decision of any kind. Pretty much any decision to do anything is necessarily a decision not to use the same time and effort to engage in ?economic activity.? If I choose to spend an hour sleeping, I necessarily choose not to spend that time working or buying products of some kind.

Another noteworthy aspect of the Michigan decision is that it ruled that the Thomas More plaintiffs had standing and that the case was ripe. In this respect, it was similar to the earlier Virginia ruling, which also came down against the government on these points. It looks like standing and ripeness issues will be less of a problem for the anti-mandate plaintiffs than I at first thought.

Finally, there is no question that the ruling is a setback for the anti-mandate cause. As a predictive matter, I have always thought that the government is ultimately more likely to prevail in the mandate litigation than lose it. This decision reinforces that impression. 

At the same time, the ultimate outcome here is far from certain. The Michigan court?s decision doesn?t bind the Virginia and Florida district courts currently considering the two biggest challenges to mandate (those brought by 21 states and the National Federation of Independent Business). Moreover, Judge Steeh?s conclusion that this case is fairly easily covered by existing Commerce Clause precedent is at odds with the Virginia judge?s earlier ruling concluding that no previous precedent covers this case. It therefore seems to me unlikely that the latter will follow the Michigan reasoning in his own eventual decision (though he could of course uphold the mandate on other grounds). And of course both this ruling and those that will be eventually issued by the other district courts are subject to review by the US courts of appeals, and ultimately the Supreme Court. 

Full post as published by The Volokh Conspiracy on October 07, 2010 (boomark / email).